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How Industry 4.0 Impacts Retail 4.0

Much has been written and said about the dramatic changes in commerce, and society generally, from Industry 4.0. These developments are undeniable, and their impact is especially pronounced in the retail sector.

The technological innovations of the last several years have been described as another Industrial Revolution—similar in impact to the previous Industrial Revolution. If that seems overstated, it’s worth remembering that the first Industrial Revolution was the result of new efficiencies in production, resulting in cheaper, more widely available products. A similar process is now underway in the current revolution—but the results are even more profound.

The use of artificial intelligence (AI), machine vision, digital twins, and other technologies is making work more efficient at all levels and across many industries. The ability to gather, organize, and analyze data in huge quantities has vastly improved productivity, inventory control, quality control, and customer management.

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How Industry 4.0 Works

In today’s world, computers can connect and communicate with each other, and in some cases, make decisions without the necessity of human involvement. The Internet of Things (IoT) enables those computers to communicate with all manner of other devices, including sensors, machines, cameras, and RFID tags. The result is an unprecedented level of transparency into all phases of a given process.

Like the first Industrial Revolution, Industry 4.0 has freed people from many unproductive, repetitive tasks so they can engage in more productive activities. And they now have much more real-time data to inform their decision-making. More information leads to better decisions.

Industry 4.0 in Manufacturing

Machine vision uses camera images from the workplace to convey information that computer software then analyzes. This technology can identify objects, read text, detect abnormalities, and perform dimensional measurements. Machine vision systems can inspect products at incredibly high speeds with consistency and objectivity, eliminating the risk of human error. Manufacturers can use it to detect product defects early in the process. This technology is now helping manufacturers with product identification, measurement, process monitoring, quality inspection, and guidance for robotic systems. The result is higher throughput, more flexible production processes, faster identification of problem areas, and reduced need for human labor.

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Another innovation that is proving effective in manufacturing is digital twin technology. This involves creating a virtual replica of a physical object, system, or process which can mimic, replicate, and predict the behavior of its real-world counterpart. Manufacturers can use digital twins to monitor, analyze, and optimize the performance of their assets throughout their life cycle. They can identify problems quickly and formulate solutions in the digital realm that can be applied to the physical realm, reducing overall costs.

Industry 4.0 Hits the Retail Sector

These same tools are changing the face of retail, making it more efficient and productive. For instance:

  • Asset protection teams can use digital twin technology to identify and predict problematic customer behavior.
  • Digital twins can improve inventory management by accurately predicting demand, identifying trends, and optimizing stock levels.
  • Retailers can use real-time data from IoT sensors and other sources to monitor product movements across the supply chain.
  • Digital twin technology can help retailers identify inefficiencies in the supply chain.
  • Retailers can use their camera systems to analyze customer behavior. The insights they gain can help them improve product placement and store layout.
  • The same technology can be used to analyze foot traffic patterns in a store and identify sources of trouble. The enhanced data can help retailers improve security and optimize their use of staff.
  • Digital twins can offer unique insights into customer behavior, preferences, and buying patterns. By analyzing this data, retailers can create personalized marketing campaigns, product recommendations, and promotions tailored to individual needs.

Lessons from the Fashion Industry

The retail fashion industry is already adapting to the possibilities inherent in Industry 4.0; this is largely a result of necessity, as research shows that younger shoppers—the key target demographic—are increasingly buying online. The challenge is to make the online experience as engaging and satisfying as an in-store visit. In this, AI and other technological solutions are more than capable of obliging. Smart fashion retailers focus on creating an online experience that is personalized, customized, and hassle-free—that means providing conveniences such as one-click payment options, fast delivery times, and reliable quality assurance.

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The first Industrial Revolution brought mass‑produced items to the public, resulting in broad uniformity in the products available to customers. Whether buying a shirt, a handgun, or an automobile, consumers could be assured that their product would be much like those purchased by others.

Industry 4.0 seeks the opposite goal: a buying experience completely tailored to the needs and wishes of the individual consumer. Using AI and personal consumer data, retailers can anticipate customer preference, offering products in line with the consumer’s demonstrated tastes. This makes for a more satisfying experience for the customer, and enhanced sales for the retailer.

In one vivid example, retailers can use augmented reality to enable online customers to “try on” clothes virtually before ever setting foot in a physical store.

Retailers can also use digital twin technology to monitor and optimize the performance of their equipment and facilities, spotting potential problem areas early, and reducing maintenance costs and downtime.

All these examples represent a fraction of the impact Industry 4.0 is having on the retail sector. As these advances evolve and improve, their presence will continue to make retail commerce more efficient, more profitable, and more satisfying to consumers.

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